DISCUSSION QUESTIONS, PROBLEMS, AND PROJECTS
1) The management of a national book club was convinced that the company's market segment consisted
of individuals in the 25- to 35-year-old age group, while its major competitor's market segment seemed
more widely distributed with respect to age. It attributed this difference to the type of magazines in
which the competitor advertised. Management decided to do a study to determine the socioeconomic
characteristics of its own market segment. Management formed a panel of HOO heads of households
who had previously shown a strong interest in reading. Mail questionnaires would be sent to all the
panel members. One month after receiving all the questionnaires, the company would again send
similar questionnaires to all the panel members. In this situation is the research design appropriate? If
yes. Why? If no, why not?
2) M r. Pennymarch, the advertising manager for Chemistry Today magazine, is responsible for selling
advertising space in the magazine, The magazine deals primarily with chemical processing technology
and is distributed solely by subscription. Major advertisers in the magazine are the producers of
chemical processing equipment, since the magazine is primarily directed at engineers and other
technical people concerned with the design of chemical processing units.
Since the size and composition of the target audience for Chemistry Today are key concerns for
prospective advertisers, Pennymarch is interested in collecting more detailed data on the readership.
Although he presently has total circulation figures, he feels that these understate the potential
exposure of an advertisement in Chemistry Today. In particular, he feels that for every subscriber, there
are several others in the subscriber's firm to whom the magazine is routed for their reading. He wishes
to determine how large this secondary audience is and also wishes to develop more detailed data on
Chemistry Today readers, such as degree of technical training, level in the administrative hierarchy, and
so on.
(a) Does Pennymarch have a specific hypothesis? If yes, state the hypothesis.
(b) What type of research design would you recommend? Justify your answer.
3) The Allure Company, a large manufacturer of women's beauty aids, conducted a study in 2006 in order
to assess sales of its brand of hair dye. Questionnaires were mailed to a panel of 1,260 families. The
Allure brand of hair dye had three major competitors: Brand A, Brand B, and Brand C. A similar study
conducted in 2005 had indicated the following market shares: Allure, 32 percent (i.e., 400 families);
Brand A, 25 percent (315 families); Brand B, 33 percent (410 families); and Brand C, 11 percent (135
families). The 2006 study indicated that Allure's market share had not changed during the one-year
period, although Brand B had increased its market share to 37 percent (460 families). However, this
increase could be accounted for by a decrease in Brand A's and Brand C's market shares. Brand A now
had a market share of22 percent (280 families); Brand C now had a market share of 10 percent (120
families). The management of the Allure Company decided it had little to worry about.
The 2006 study also revealed some additional facts. Over the one-year period 70 families from
Brand A and 30 families from Brand C had switched to Allure. Five families from Brand B and 30 families
from Brand C had switched to Brand A; none of the Allure users had switched to Brand A. These facts
further reassured management. Finally, 45 families switched from Brand B to Brand C, but none of the
families using Allure or Brand A had switched to Brand C. Brand C's loyalty was estimated to be .556.
(a) Do you think that management of the Allure Company was accurate in analyzing the
situation? Justify your answer.
(b) You are called upon to do some analysis. From the data given above, construct the
brand switching matrix. (Hint: Begin by filling in the row and column totals.)
(c) Indicate what this matrix reveals for each of the brands over the one-year period.
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(d) Complete the following table and compute the brand loyalties.
Bought Allure
At Time (t1 ):
At Time (t2 )
Bought A
Bought B
Bought C
Total
Bought Allure
Bought A
Bought B
Bought C
Total
(e) What can be said about the degree of brand loyalty for each of the four products
4) The Nutri Company was a medium-sized manufacturer of highly nutritional food products. The products
were marketed as diet foods with high nutritional content. The company was considering marketing
these products as snack foods but was concerned about its present customers' reaction to the change in
the products' images. The company decided to assess customers' reaction by conducting a study using
one of the established types of consumer panels. What type of panel would you recommend in this
situation? Why?
5) Super Savers is a chain of department stores located in large towns and metropolitan centers in the
northeastern United States. In order to improve its understanding of the market, management has
decided to develop a profile of the so-called average customer. You are requested to design the study.
(a) What kind of research design will you select? Justify your choice.
(b) List at least 10 relevant variables.
(c) Specify at least four hypotheses. (Note: Remember that a hypothesis is an educated
guess about how two or more variables are related. You should indicate how each of the
variables would be measured.)
(d) Construct dummy tables for four of the variables t hat you specified in part (b) of this
problem and two of the hypotheses developed for part (c).
6) Consider the following statement: "The increase in sales is due to the new sales personnel that we
recruited from the vocational school over the last several years. Sales of the new salespeople arc lip
substantially, while sales fin' longer-term salespeople have not increased."
(a) Identify the causal factor (X) and the effect factor (Y) in the above statement.
(b) Discuss the evidence that would be necessary to establish that factor (X) caused factor
(n in the above statement.
7) The research department of the company in Problem (j investigated the change in sales for each of the
company's salespeople. Using criteria supplied by management, the department categorized all territory
sales changes as "increased substantially," "increased marginally," or "no increase." Consider the
following table, in which 260 sales personnel have been classified as old or new.
(a) Does this table provide evidence of consistent variation? Justify your answer.
(b) What conclusions can be drawn about the relationship between X and}' on the basis of
the table?
Salesperson
Assigned
Increased
Substantially
New
Old
75
50
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Territory Sales Change
Increased
No
Marginally
Increase
30
40
5
60
Total
110
150
8) The product development team at Rushy's Briquets has been working 011 several modifications of
Busby's highly successful line of charcoal briquet. The most promising development is a new briquet that
imparts a unique smoky flavor to grilled meat. Management, based on favorable feedback from a few
employees who have tested the product in their homes, feels that the new briquet has the potential to
become a major seller.
At a recent strategy session, the vice president of marketing suggested a test-marketing
program before committing to introduction of the new briquet. He pointed out that a test market
would be a good way to evaluate the effectiveness of two alternative advertising and promotional
campaigns that have been proposed by Busby's ad agency. He feels that effectiveness should be
evaluated in terms of the trial- and repeat-purchasing behavior engendered by each program. He also
wants to gauge Busby’s current distributors' acceptance of the new product.
The CEO of Busby’s however is not very enthusiastic about the idea of test marketing. She
pointed out several of her concerns, among them the fact that Busby's competitors could easily
duplicate the new briquette, the fart that the company is nearing the limit of budgeted costs for
developing the new briquet, and the fart that the seasonal nature of briquet sales makes it imperative
to reach a "go-no go" decision Oil the new briquet by early April, only four months away.
The director of marketing research stated that she felt a test-marketing plan could he devised
that would satisfy both the vice president of marketing and the CEO. She was instructed to submit a
preliminary proposal at the next strategy session.
(a) What information should be obtained from the test market in order to satisfy the vice
president of marketing?
(b) Under what constraints must the test-marketing plan operate in order to satisfy the
CEO?
(c) Given your answers to (a) and (b) what method of test marketing should the director
recommend? Why?
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